Single farm payment tax confusion

TAX EXPERTS have slammed the taxman and are calling for a decision from the authorities about the way Single Farm Payments will be taxed.

In January, the support system for farmers was dismantled and replaced with a single farm payment to be paid in December 2005.

Farmers can receive the payments if they maintain their land in good agricultural condition and comply with certain standards.

Although the scheme was introduced in January, farmers still don't know how it will be taxed:

Martin Johnson, at the Sunderland office of national accountancy group UHY Hacker Young said:

"The scheme started up months ago but farmers still don't know where they stand. The ground rules keep changing and there is confusion. It's very likely the Revenue will announce that farmers will be taxed straight away, before they've even received the payment and this could cause major cash flow problems for hundreds of farmers."

To qualify for the single farm payment, farmers will need to register their land and complete a form. The amount of payment depends on the size of the land and the Department for Environment, Food and Rural Affairs (Defra) status of that land.